I think I have yet to do 7 hours of exercise a week. I am up to 30 minutes a day on my exercise bike (up from my original 5 minutes a day when I started--seriously) and other than doing laundry, shopping or things like that, I don't get more than 3 and a half hours per week and I have lost over 40 pounds since the beginning of the year. I will probably step up my exercise at some point because I do have a lot of weight to lose and a long way to go, but for now this is working for me.
As far as your question about when and how long to exercise, I think your idea is great to do an hour's worth of exercise throughout the day rather than all at one time (I may use that myself!) I know I would find a complete hour of exercise at one time a little overwhelming to say the least and probably difficult for me at my weight. But that is just me. You need to find what works for you.
In any event, I wish you luck! Please update us on how you are doing.